Rio Tinto Looking to Build Larger, Diversified Lithium Portfolio

Mining giant Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) is set to build a larger and diversified battery metals portfolio as carmakers continue to scramble to secure long-term supply of key metals needed for the energy transition.

“With every project in the world that's projected to come on, we'll still be short by 50 percent of the amount of lithium that's required to build the electric vehicles,” Sinead Kaufman, Rio Tinto's chief executive of minerals, said at an event in Perth last week.

“The battery materials division in Rio has really been dedicated to trying to build, at scale, a portfolio of mining assets across lithium, but also of other critical minerals and battery materials,” she added.

Rio Tinto has looked at building diversity in its lithium portfolio across hard-rock mining, brine developments and also heavily mined old material. Kaufman believes it is key to support innovation for developing lithium out of different sources.

Rio Tinto sources its battery-grade lithium in the US from nearly a century’s worth of mining waste rock at its Boron operations in California. It also owns the Western Serbia-based Jadar lithium-borates project, which last year was blocked by the government following massive protests; earlier in 2022, the mining giant bought the Rincon lithium brine project in Argentina.

Kaufman, who was speaking at the Battery Gigafactories Asia Pacific event, held by Benchmark Mineral Intelligence, said the world is beginning to better understand what minerals that are needed for the energy transition and where they are going to come from.

“The perfect storm for climate change is the shortage of supply of minerals; it's really critical that we find an innovative (and) relatively quick path forward,” she said. “I think for us as a business, it's made us really think differently. It's not just about mining, it's about partnerships — it's about technology, innovation and science.”

Kaufman went on to tell the conference audience in Perth that consumers today want to know where their product comes from, and they want to be aware of all the hands it has gone through to get to where it is.

“First of all, we've got to decarbonise our own business, because producing materials for the green transition can’t be done in the way it was previously,” she said. “And so we certainly see that we've got to accelerate our decarbonisation of our own business.”

Last year, Rio Tinto said that it would spend about US$7.5 billion from then until 2030 to reduce its greenhouse gas emissions by about 50 percent across its businesses globally in that timeframe.

“What we're doing is really increasing spending on research and development, on developing technologies that can help us decarbonise and also our customers to decarbonise,” Kaufman said. “That technology and partnerships are something that we've seen grow exponentially in the last couple of years.”

Commenting on manufacturers' expectations, she said they want to see responsible lithium sourcing, as with any other product.

“I think that that push that we've seen to lock in supply, and quickly, also then comes with the expectation that it has to be done sustainably and it has to be produced in the right location as well,” she said.

When asked about whether Rio Tinto will go further downstream, Kaufman said it will be on a case-by-case basis.

“You have to go downstream to be able to fully understand the value from the product, but also understand the needs of the customer, and how far downstream I think will depend greatly on different jurisdictions and different countries,” she said.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.